INTERIM FINANCIAL REPORT

Transcription

1 INTERIM FINANCIAL REPORT JANUARY 1 TO JUNE 30,

2 Contents 2 Contents 3 Key figures 4 Highlights 5 Group management report 26 Consolidated statement of income 27 Consolidated statement of comprehensive income 28 Consolidated statement of financial position 30 Consolidated statement of cash flows 32 Consolidated statement of changes in equity 33 Notes to the consolidated financial statements 42 Responsibility statement by management 43 Multi-year overview 44 Financial calendar 44 Contact COVER PHOTO digital@dürr: Machine data can be displayed on the smartphone in realtime.

3 Key figures for the Dürr Group (IFRS) 3 Key figures for the Dürr Group (IFRS) H H Q Q Order intake m 2, , , Orders on hand (June 30) m 2, , , ,698.9 Sales revenues m 1, , Gross profit m EBITDA m EBIT m EBIT before extraordinary effects 1 m Earnings after tax m Gross margin % EBIT margin % EBIT margin before extraordinary effects 1 % Cash flow from operating activities m Cash flow from investing activities m Cash flow from financing activities m Free cash flow m Capital expenditure m Total assets (June 30) m 3, , , ,107.0 Equity (with non-controlling interests) (June 30) m Equity ratio (June 30) % ROCE 2 % Net financial status (June 30) m Net working capital (June 30) m Employees (June 30) 14,545 15,051 14,545 15,051 Dürr share ISIN: DE High Low Close Average daily trading volumes Units 152, , , ,600 Number of shares (weighted average) Thous. 34,601 34, ,601 Earnings per share Minor variances may occur in the computation of sums and percentages in this statement due to rounding. 1 Extraordinary effects in H1 2017: 14.9 million (income from the sale of Dürr Ecoclean: 22.7 million, purchase price allocation HO- MAG Group: -4.4 million, costs for business discontinuation Dürr thermea GmbH: -3.4 million), H1 2016: -0.5 million 2 Annualized 3 Xetra

4 Highlights H Highlights H1 2017: Record order intake Incoming orders: 4.5% up on the previous year Adjusted for Ecoclean (sold): up 9.0% Strong demand in Europe, improvement in China, North America returning to normal after earlier strong years Order backlog: 2.7 billion, 175 million up on the end of 2016 Sales: up 2.6%, adjusted for Ecoclean (sold): up 4.9% Book-to-bill ratio: 1.2 Positive earnings trend in H1: EBIT up 21.2%, adjusted for extraordinary effects: up 8.2% Earnings after tax: up 28.2% High gross margin of 24% Operating EBIT (adjusted for extraordinary effects) in Q2 on par with the previous year despite slight sales decline (down 2.6%). Cash flow of million in H1 after expected NWC accumulation, improvement expected in H2 Net financial status of 96 million clearly in positive territory, includes inflow of proceeds from the sale of Ecoclean Outlook for 2017 unchanged: Order intake: 3.3 to 3.7 billion Sales: 3.4 to 3.6 billion EBIT margin: 7.5 to 8.25% (including effects from the sale of Ecoclean)

5 Group management report 5 GROUP MANAGEMENT REPORT Strategy The Dürr 2020 strategy is our roadmap for the Group s development through It defines the following targets: Sales: increase to as much as 5 billion by 2020 through organic growth and further acquisitions. EBIT margin: increase to 8 to 10% by ROCE: Planned level of more than 30% by 2020 on a sustained basis. PORTFOLIO STRATEGY: TAPPING NEW AREAS OF GROWTH A key element of Dürr 2020 entails tapping new areas of growth. Following the successful takeover of the HOMAG Group in 2014, we want to continue on our acquisition course. As was the case with the HOMAG Group, we are particularly seeking potential candidates outside our core automotive business. This is because our large share of the market is placing a cap on potential for business growth in the automotive industry. Looking ahead over the next few years, we expect our business in this segment to expand by an average of around 3% per year. Moreover, we are planning further smallish bolt-on acquisitions. The acquisition criteria for potential targets are: Mechanical and plant engineering or related services and technologies (e.g. software) Leading market and technological position Not in need of restructuring but offering potential for improved earnings and synergies A corporate culture which is a good fit for Dürr FURTHER STRATEGIC AREAS Our strategy for the existing portfolio has one main goal: to ensure that Dürr as a plant and mechanical engineering specialist retains its position at the market vanguard in the digital era. We are driving forward the digitization of our products, services and processes under digital@dürr. As the core element of our strategy, digital@dürr has ramifications for the four strategic fields that accompany it. We are implementing digitization initiatives in all four segments and simultaneously working on other aspects critical for success such as the optimization of our organizational structures and the development of technology.

6 Group management report 6 The main thrusts of the individual strategic fields are: INNOVATION: Internet of Things (IoT) Smart factories, smart products, smart processes Automation GLOBALIZATION: Further localization of manufacturing input in the emerging markets SERVICE: Smart services (e.g. predictive maintenance) Customer relationship management Growth through optimized service for the installed base EFFICIENCY: Digital transformation of the value creation processes Process optimization Operating environment ECONOMY Economic data for the first half of 2017 shows that the global economy remains on a solid trajectory. North America and Europe achieved moderate growth of 2.4% and 1.8%, respectively. In China, GDP expanded by 6.7%, with India growing somewhat more quickly by 7.3%. Commodity and energy prices softened in the second quarter compared with the beginning of the year. Similarly, interest rates failed to continue on the upward path that they had adopted in the first quarter. Contrary to the original market expectations, the euro rose against the US dollar in the second quarter to ECONOMIC FORECAST GDP growth, % F 2018F United States Japan Eurozone Emerging Markets China India Brazil Global Source: Deutsche Bank, June 2017 F = forecast AUTOMOTIVE INDUSTRY Global automotive sales generally rose in the first half of Only the US market saw a decline of 2% in passenger vehicle sales. The other markets including Russia grew, in some cases substantially. The European market delivered further robust growth with gains of 4%. In China, passenger vehicle sales rose by 3% following the reduction by half of tax benefits on the purchase of small cars at the beginning of 2017.

7 Group management report 7 CAR SALES JANUARY TO JUNE 2017 % year-on-year change New EU countries 15 Japan 10 India 8 Russia 7 Brazil Western Europe 4 4 Germany China 3 3 USA Source: VDA, 07/2017 GENERAL MECHANICAL ENGINEERING The German Mechanical and Plant Engineering Association (VDMA) raised its full-year production forecast for 2017 substantially in June and is now looking for an increase of 3% instead of 1% as before. Order receipts are also pointing upwards. According to VDMA data, orders in May rose by 17% year-on-year. In the period from March to May 2017 they increased by an average of 4%, underpinned by brisk domestic and foreign demand. The VDMA association for secondary wood processing (the sub-market of relevance for HOMAG) registered sharp growth in orders of 24% from January to May 2017 (excluding price adjustments). The woodworking machinery sector should be able to achieve mid single-digit sales growth in 2017.

8 Group management report 8 Business performance* ORDER INTAKE EXCEEDING THE PREVIOUS YEAR S RECORD LEVEL At 2,078.7 million, order intake reached a new record in the first half of Compared with the previous year ( 1,989.3 million), new orders were up by 4.5% and, adjusted for the sale of the Ecoclean Group, by as much as 9.0%. At 1,022.7 million, order intake in the second quarter fell only slightly short of the very high figure recorded in the first quarter ( 1,056.1 million) and rose by 8.7% over the second quarter of The greatest growth in new orders in the first half of 2017 was reported by the Woodworking Machinery and Systems division, which achieved an increase of 33.0%. Clean Technology Systems and Application Technology posted growth of 5.6% and 5.2% respectively. Order intake in the Paint and Final Assembly Systems division fell short of the previous year by 4.5%, although new orders reached a very high level in the second quarter with growth of 10.9%. In the Measuring and Process Systems division, order intake declined by 23.0%, although this was primarily due to the sale of the Dürr Ecoclean Group (industrial cleaning technology) with effect from March 31, Order intake in the emerging markets (Asia excluding Japan, South and Central America, Africa, Eastern Europe) climbed by 36% in the first half of 2017 to 1,146.8 million, contributing 55% to total order receipts. The orders from China included in this gained substantial momentum, rising by 51% to million. Order intake was also up in Brazil, South Korea, Russia and Iran. The situation in North America returned to normal: after the extremely high figure recorded in the previous year, new orders dropped by 34% in the first half of 2017 to million. Exchange-rate changes had virtually no impact on order intake, sales and EBIT in the first half of the year. ORDER INTAKE ( MILLION), FIRST HALF OF ,500 2,000 +4% 1, , ,500 1, % % % % % Total China Americas Germany Europe (without Asia (without Germany) China), Africa, Australia * This interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS).

9 Group management report 9 m H H Q Q Order intake 2, , , Sales revenues 1, , Orders on hand (June 30) 2, , , ,698.9 MODERATE SALES INCREASE IN THE FIRST HALF OF THE YEAR Sales rose by 2.6% to 1,751.3 million in the first half of Adjusted for the sale of the Ecoclean Group, they were up 5%. We saw a slight decline of 2.5% in the second quarter. This was due to the Paint and Final Assembly Systems division, where the work commenced on many new projects caused a temporary drop in revenue recognition. Moreover, sales in the Measuring and Process Systems division were down, although this was due solely to the sale of Dürr Ecoclean. On a like-for-like basis, sales in this division were 5.7% higher. Woodworking Machinery and Systems and Clean Technology Systems both posted double-digit growth in sales in the first half of 2017, while sales from Application Technology were up 8.8%. Services revenues contracted by 2.1% to million in the first half of This translates into a share of 25.8% in total sales (H1 2016: 27.1%). Adjusted for the sale of Dürr Ecoclean service sales grew by 1.0%. We expect service business to go on expanding across the Group in the second half of the year. Consolidated sales were spread evenly across the individual regions in the first half of the year, with Germany accounting for 14%, the rest of Europe for 29%, North and South America for 26% and Asia, Africa and Australia for 31%. The emerging markets contributed 46% (H1 2016: 50%). At 1.2, the book-to-bill ratio reached a high level. Order backlog rose by million over the end of 2016 to 2,743.0 million. There was also a slight increase compared with June 30, 2016 ( 2,698.9 million), although order books were down 136 million due to the sale of Ecoclean. HIGH GROSS MARGIN OF 24.0% High capacity utilization and the growth in sales, which generated economies of scale in the machinery divisions in particular, caused gross profit to climb by 3.2% to million in the first half of The gross margin widened slightly from 23.9% to 24.0%. In the second quarter, it contracted slightly to 23.7% (Q2 2016: 24.1%) primarily as a result of somewhat heavier price pressure in plant engineering. The increase in R&D expenses to 56.1 million in the first half of 2017 (up 15.2%) is primarily attributable to our digital@dürr digitization strategy. Other overheads dropped by 0.2% despite the higher sales. Other operating income net of other operating expense came to 23.1 million (H1 2016: 3.9 million), one key factor in this being the extraordinary income of 22.7 million from the sale of Ecoclean. In the second quarter, sales costs and overhead costs included 3.4 million for the discontinuation of the business of Dürr thermea GmbH, which specializes in large heat pumps. This company forms part of the energy efficiency technology segment within the Clean Technology Systems division and persistently operated at a loss. Further information can be found in the segment report on Clean Technology Systems on page 19. Driven by the high gross profit and the extraordinary income from the sale of Ecoclean, EBIT rose by 21.2% in the first half of 2017 to million (H1 2016: million). It declined by 6.3% to 56.5 million in the second quarter primarily as a result of the discontinuation costs for Dürr thermea. In addition, Dürr Ecoclean no longer contributed any earnings in the second quarter. The EBIT margin widened from 7.0% to 8.2% in the first half of the year.

10 Group management report 10 Operating EBIT climbed by 8.2% to million in the first half of the year (operating EBIT in H1 2016: million). This figure has been adjusted for the extraordinary income from the sale of Ecoclean ( 22.7 million), the exceptional expenses in connection with Dürr thermea ( 3.4 million) and purchase price allocation for HOMAG ( 4.4 million). The operating EBIT margin improved from 7.0% to 7.4% and was unchanged at 7.2% over the previous year in the second quarter. Before depreciation and amortization of 40.6 million, EBITDA was up 17.5%, rising to million. Net finance expense came to 9.7 million in the first half of 2017 (H1 2016: 7.1 million). This includes the interest expense on the bonded loan issued in March 2016, which was only partially included in the previous year s figure. At 4.2 million in the second quarter of 2017, net finance expense was on a par with the previous year. The tax rate dropped to 25.8% (H1 2016: 30.4%) as only a small amount of tax was payable on the extraordinary income from the sale of Ecoclean. Consequently, earnings after tax climbed by 28.2% to 99.7 million, translating into earnings per share of 2.83 (H1 2016: 2.21). In the second quarter, earnings after tax dropped by 5.2% to 37.2 million, with earnings per share coming to 1.05, down from 1.11 in the same period of the previous year. INCOME STATEMENT AND PROFITABILITY RATIOS H H Q Q Sales revenues m 1, , Gross profit m Selling and administrative expenses m R&D expenses m EBITDA m EBIT m EBIT before extraodinary effects 1 m Net finance expense m EBT m Income taxes m Earnings after tax m Earnings per share Gross margin % EBITDA margin % EBIT margin % EBIT margin before extraodinary effects 1 % EBT margin % Return on sales after taxes % Interest coverage Tax rate % Extraordinary effects in H1 2017: 14.9 million (income from the sale of Dürr Ecoclean: 22.7 million, purchase price allocation for HOMAG Group: -4.4 million, costs for business discontinuation Dürr thermea GmbH: -3.4 million), H1 2016: -0.5 million.

11 Group management report 11 SIGNIFICANT EVENTS Effective March 31, 2017, we received an inflow of cash of million and extraordinary income of 22.7 million from the sale of the Dürr Ecoclean Group. Other than this, there were no individual events in the first half of the year materially impacting the Dürr Group s results of operations, financial condition and net assets. The appreciable competitive pressure in the Paint and Final Assembly Systems division is being offset by demand in excess of expectations in the Woodworking Machinery and Systems division. Financial position CASH FLOW INFLUENCED BY RISING NET WORKING CAPITAL Cash flow from operating activities improved by 43.7 million to million in the first half of This was chiefly due to higher proceeds and revenues as well as changes in provisions. Net working capital (NWC) rose by million and, hence, at a similar rate as in the previous year. This reflected the fact that the above-average volume of prepayments received at the end of 2016 returned to normal levels again. We do not expect any further pronounced increase in NWC in the second half of the year and therefore anticipate a substantial improvement in cash flow. CASHFLOW* m H H Q Q Earnings before taxes Depreciation and amortization Interest result Income tax payments Change in provisions Change in net working capital Other items Cash flow from operating activities Interest payments (net) Capital expenditure Free cash flow Other cash flows (incl. dividend) Change in net financial status * Currency translation effects have been eliminated from the cash flow statement. Accordingly, the cash flow statement does not fully reflect all changes in balance sheet positions as shown in the statement of financial position. At 7.5 million, cash flow from investing activities was positive in the first half of 2017 (H1 2016: million). This was mainly due to the inflow of the proceeds from the sale of Ecoclean ( million), although part of this amount was immediately invested in fixed-term deposits. Cash flow from financing activities came to million (H1 2016: million) and was primarily influenced by the dividend distribution as well as interest payments on the corporate bond and the bonded loan. In the previous year, the issue of the bonded loan had generated a cash inflow of 300 million.

12 Group management report 12 Free cash flow came to million (H1 2016: million) due to the negative cash flow from operating activities. Net financial status stood at 96.2 million at the middle of 2017, benefiting from the cash inflow from the sale of Ecoclean, while the dividend outflow of 72.7 million exerted the opposite effect. We expect the net financial status to develop clearly positive in the second half of the year. NET FINANCIAL STATUS m June 30, December 31, June 30, TOTAL ASSETS DOWN SLIGHTLY CURRENT AND NON-CURRENT ASSETS m June 30, 2017 Percentage of total assets December 31, 2016 June 30, 2016 Intangible assets Property, plant and equipment Other non-current assets Non-current assets 1, , ,173.9 Inventories Trade receivables Cash and cash equivalents Other current assets Current assets 2, , ,933.1 Total assets 3, , ,107.0 Total assets decreased by 2.3% compared with the end of 2016 to 3,272.5 million. The deconsolidation of Ecoclean caused total assets to decline by around 40 million. This includes the purchase price payment as well as the 15% share in the successor company SBS Ecoclean GmbH. Trade receivables and inventories rose by a total of million. On the liabilities side, trade payables fell slightly by 10.9 million. Accordingly, net working capital adjusted for exchange-rate changes climbed by million to million. The decline of million in cash and cash equivalents is primarily due to the increase in NWC. At 1,121.7 million, non-current assets remained largely unchanged.

13 Group management report 13 CHANGES IN LIQUIDITY m Cash and cash equivalents Dec. 31, 2016 Operating cash flow Investments (incl. acquisitions) Others (e.g. proceeds Ecoclean sale, dividend, interest payments) Cash and cash equivalents June 30, % INCREASE IN EQUITY SINCE MID 2016 EQUITY m June 30, 2017 Percentage of total assets December 31, 2016 June 30, 2016 Subscribed capital Other equity Equity attributable to shareholders Non-controlling interests Total equity Equity stood at million in mid 2017 and, hence, 17% higher than twelve months earlier. It was largely unchanged compared with the end of 2016 as the positive effects from the high earnings after tax were neutralized by the dividend payment and currency-translation losses. The equity ratio widened from 22.9% in mid 2016 to 25.5%. We expect a further increase by the end of the year and, looking further down the road, hope to achieve a figure of up to 30%.

14 Group management report 14 CURRENT AND NON-CURRENT LIABILITIES m June 30, 2017 Percentage of total assets December 31, 2016 June 30, 2016 Financial liabilities (incl. bond, bonded loan) Provisions (incl. pensions) Trade payables Of which prepayments received Income tax liabilities Other liabilities (incl. deferred taxes, deferred income) Total 2, , ,395.5 Current and non-current liabilities dropped by 3.1% compared with December 31, Trade payables remained the largest item on the liabilities side. The prepayments included in this item fell by 27.3 million compared with the end of 2016 but were up 69.0 million or 12.5% over June 30, The main reason for the decline in other liabilities was the derecognition of held-for-sale liabilities attributable to Dürr Ecoclean. Pension provisions were valued at 49.4 million as of mid 2017, equivalent to only 1.5% of the balance sheet total. DEBT CAPITAL AND FUNDING STRUCTURE We did not execute any funding transactions in the first half of As of June 30, 2017, our funding structure was composed of the following elements: Corporate bond of 300 million Bonded loan of 300 million Syndicated loan of 465 million Real estate loan for the purchase of the Dürr Campus in Bietigheim-Bissingen (2011) with a carrying amount of 34.3 million Bilateral credit facilities and liabilities from finance leases of a minor volume OFF-BALANCE-SHEET FINANCING INSTRUMENTS AND OBLIGATIONS There has largely been no change in the volume of off-balance-sheet financing instruments and obligations since the end of Future minimum payments under operating leases amounted to million as of June 30, 2017 (December 31, 2016: million). Operating leases constitute the most important form of off-balance-sheet funding for Dürr. Sales of receivables (forfaiting, negotiation) dropped by 2.0 million compared with the end of 2016, accounting for a small volume of 3.2 million. As of June 30, 2017, our loan and guarantee facilities had a combined value of 1,009.9 million (December 31, 2016: 1,026.5 million). Total drawdowns on all available loan and guarantee facilities stood at million (December 31, 2016: million). The guarantees do not constitute off-balance-sheet finance instruments. ACTUAL PERFORMANCE VS. FORECAST: BUSINESS DEVELOPMENT AND FINANCIAL POSITION IN LINE WITH EXPECTATIONS Business in the first half of 2017 largely lived up to our expectations. Earnings increased substantially as a result of the extraordinary income from the sale of Ecoclean. However, EBIT adjusted for extraordinary effects also rose by 8%. Although sales fell somewhat short of expectations for project-status reasons, they should improve in the second half of the year. Order receipts were somewhat higher than budgeted in the first half of Cash flow and net financial status at the end of the first half matched expectations. Both indicators customarily improve in the second half of the year. Overall, we are confident of being able to achieve our full-year forecasts with ease. Further information on our full-year forecasts can be found in the Outlook section on page 21.

15 Group management report 15 R&D and capital expenditure RESEARCH AND DEVELOPMENT In connection with we increased our direct research and development (R&D) expenses by 15.2% to 56.1 million in the first half of They rose by 11.4% to 27.6 million in the second quarter. The R&D ratio stood at 3.2% in the first half of the year as well as in the second quarter, up from 2.8% in the comparable periods of the previous year. In addition to direct R&D spending, other development costs arising in connection with customer orders are reported within the cost of sales. In the first half of the year, development expenses of 5.3 million were capitalized (H1 2016: 6.6 million), including 2.3 million in the second quarter (Q2 2016: 3.3 million). The Group s R&D departments had 688 employees as of June 30, 2017 (June 30, 2016: 688). All five divisions have been developing new technologies and services in the year to date. Here are some selected examples: Paint and Final Assembly Systems presented a new business intelligence solution for smart data analytics in paintshops in a pilot project. This system cyclically scans and stores all the data points of a certain part of the plant. The results can be selected, visualized and analyzed using a dashboard function. Application Technology presented a compact painting robot for general industry in conjunction with its partner Kuka. The ready2spray robot is fully automatic, does not entail any integration requirements on the customer s premises and is suitable for use in a wide range of different sectors (e.g. metal, wood, furniture, electronics). Measuring and Process Systems presented the second-generation of the Schenk Pasio 50 balancing machine. It is suitable for items with a weight of up to 50 kilograms such as electric armatures, spindles and turbochargers. The new generation is more ergonomic, easier to operate and has a self-diagnostics function. Clean Technology Systems additionally lowered emissions of nitrogen oxide (NOx) in exhaust air combustion. Testing of a flox (flameless oxidation) burner was successfully completed. The new process cuts NOx emissions to around one quarter of the previous level. Woodworking Machinery and Systems (HOMAG) presented the Tapio Internet of Things platform which is the first Industry 4.0 solution specifically designed for the woodworking industry. Tapio is an open IoT platform digitally networking woodworking companies, machinery providers and partner companies via a cloud solution. CAPITAL EXPENDITURE Capital expenditure on property, plant, and equipment and intangible assets fell by 13.0% to 33.6 million in the first half of This was primarily due to the fact that we had for the most part completed work on expanding our network of facilities. IT and digitization formed a key aspect of capital expenditure. At around 11.3 million, intangible assets accounted for around one third of the capital expenditure budget (H1 2016: 10.7 million). We spent 8.2 million on acquiring equity investments (including additions to existing interests in consolidated companies) (H1 2016: 0.0 million). There was no cash outflow for the share of 15% that we received in SBS Ecoclean GmbH, the successor of Ecoclean. Capital expenditure on property, plant and equipment dropped by 20.1% to 22.3 million.

16 Group management report 16 CAPITAL EXPENDITURE* m H H Q Q Paint and Final Assembly Systems Application Technology Measuring and Process Systems Clean Technology Systems Woodworking Machinery and Systems Corporate Center Total * on property, plant and equipment and on intangible assets Employees 2% LIKE-FOR-LIKE INCREASE IN EMPLOYEE NUMBERS Dürr had 14,545 employees at the middle of 2017, 3.4% fewer than on June 30, The reason for the decline was the sale of the Dürr Ecoclean Group with 839 employees. In like-for-like terms, i.e. adjusted for the Ecoclean effect, employee numbers rose by 2.2% compared with mid At 4,482, the headcount in the emerging markets remained steady (June 30, 2016: 4,489). Employee numbers in Germany dropped by 4.6% to 7,737 due to the sale of Ecoclean. EMPLOYEES BY DIVISION June 30, 2017 December 31, 2016 June 30, 2016 Paint and Final Assembly Systems 3,384 3,384 3,385 Application Technology 1,985 1,956 1,930 Measuring and Process Systems 2,244 3,010 3,034 Clean Technology Systems Woodworking Machinery and Systems 6,149 6,126 5,983 Corporate Center Total 14,545 15,235 15,051 EMPLOYEES BY REGION June 30, 2017 December 31, 2016 June 30, 2016 Germany 7,737 8,205 8,110 Other European countries 2,248 2,306 2,230 North / Central America 1,293 1,329 1,309 South America Asia, Africa, Australia 2,953 3,072 3,050 Total 14,545 15,235 15,051

17 Group management report 17 Segment report SALES REVENUES BY DIVISION m H H Q Q Paint and Final Assembly Systems Application Technology Measuring and Process Systems Clean Technology Systems Woodworking Machinery and Systems Corporate Center / consolidation Group 1, , EBIT BY DIVISION m H H Q Q Paint and Final Assembly Systems Application Technology Measuring and Process Systems Clean Technology Systems Woodworking Machinery and Systems Corporate Center / consolidation Group PAINT AND FINAL ASSEMBLY SYSTEMS H H Q Q Order intake m Sales revenues m EBITDA m EBIT m EBIT margin % ROCE 1 % >100 >100 >100 >100 Employees (June 30) 3,384 3,385 3,384 3,385 1 annualized Order intake in the Paint and Final Assembly Systems division dropped by 4.5% in the first half of However, the figure recorded in the same period of the previous year had been extraordinarily high. After muted conditions in the first quarter, orders picked up considerably. Thus, new orders in the division rose by 10.9% in the second quarter of 2017 to million. Whereas demand in North America softened as expected, it picked up in China and Europe (particularly Eastern Europe). The global project pipeline, i.e. the total volume of projects close to being awarded by our customers, remained at a similarly high level as in the previous year. Whereas sales in the Paint and Final Assembly Systems division were down 6% for billing-related reasons, the gross margin contracted only slightly in the first half of The EBIT margin narrowed from 6.7% to 5.7% due to the lower sales; however, the target range of 6.0 to 6.5% for the year as a whole should be achievable. Functional costs in the division remained virtually unchanged. We expect sales to increase in the second half of the year.

18 Group management report 18 APPLICATION TECHNOLOGY H H Q Q Order intake m Sales revenues m EBITDA m EBIT m EBIT margin % ROCE 1 % Employees (June 30) 1,985 1,930 1,985 1,930 1 annualized Order intake in the Application Technology division rose by an encouraging 5.2% in the first half of 2017, underpinned by a dynamic second quarter, in which new orders increased by 22%. Service business also remained persistently strong. Established in 2014, the Industrial Products segment (industrial painting) still made only a small contribution as planned, although order intake was up. Despite the 8.8% increase in sales, Application Technology achieved a book-to-bill ratio of 1.1. EBIT declined by 9.3%, reflecting the extraordinary income of 5.0 million that had arisen in the first quarter of 2016 from the sale of a real estate asset in the United States. At 10.2%, the operating EBIT margin was up slightly. MEASURING AND PROCESS SYSTEMS H H Q Q Order intake m Sales revenues m EBITDA m EBIT m EBIT margin % ROCE 1 % Employees (June 30) 2,244 3,034 2,244 3,034 1 annualized Effective March 31, 2017, we sold the Dürr Ecoclean Group (industrial cleaning technology), which had formed part of the Measuring and Process Systems division, to Shenyang Blue Silver Industry Automation Equipment Co., Ltd. With around 850 employees, the Dürr Ecoclean Group had generated sales of just under 200 million and EBIT of around 14 million in Proceeds from the sale of 85% of the Dürr Ecoclean business came to million. In addition, we own a 15% share in the new holding company SBS Ecoclean GmbH. The largely tax-free book profit of 22.7 million was assigned to the Corporate Center (Dürr AG). The Dürr Ecoclean Group was included in the figures for the Measuring and Process Systems division in the first quarter of 2017 but not in the second quarter. For this reason, the figures in the table for this division are not fully comparable with those for the previous year. In addition to the sale of Ecoclean, the 23.1% decline in order receipts is due to weaker business in the remaining activities (balancing, filling and testing technology). However, order intake in the remaining activities exceeded sales. EBIT and sales of the remaining activities grew at single-digit rates. Excluding the Dürr Ecoclean Group with its relatively weak profitability, the Measuring and Process Systems division posted an EBIT margin of 13.5%.

19 Group management report 19 CLEAN TECHNOLOGY SYSTEMS H H Q Q Order intake m Sales revenues m EBITDA m EBIT m EBIT margin % ROCE 1 % Employees (June 30) annualized Order intake in the Clean Technology Systems division rose by 5.6%, accompanied by a 14.2% increase in sales. The strong business performance was particularly underpinned by the markets of China and Asia. The unsatisfactory earnings situation is due to persistent losses in energy efficiency technology business. The main reason for this are the persistently low energy prices, which are exerting pressure on demand for some of our energy efficiency technologies. We responded to this in the second quarter by initiating steps to discontinue the business of Dürr thermea GmbH in large heat pumps. Dürr thermea had sustained a considerable loss in 2016 on sales of 2.6 million. The business discontinuation costs stand at 3.4 million until now and were assigned in full to the Corporate Center. WOODWORKING MACHINERY AND SYSTEMS H H Q Q Order intake m Sales revenues m EBITDA m EBIT m EBIT margin % ROCE 1 % Employees (June 30) 6,149 5,983 6,149 5,983 1 annualized Order intake in the Woodworking Machinery and Systems division (HOMAG Group) rose by one third in the first half of The strong demand was spread over all main regions, with business proving to be particularly strong in China. An important contribution to growth came from strong demand in the furniture industry for highly automated integrated production lines with batch size 1 capabilities. Despite the sharp 13.3% increase in sales, the book-to-bill ratio came to 1.2. EBIT grew by 54.8%, thus outpacing the growth in sales substantially. This figure is comparable to that of the previous year as the purchase price allocation expenses remained unchanged at 4.4 million and no other extraordinary effects arose. The operating EBIT margin (before purchase price allocation effects) rose to 7.9% (H1 2016: 6.1%); after purchase price allocation effects, the EBIT margin came to 7.1% (H1 2016: 5.2%). Looking ahead over the next few quarters, the purchase price allocation charges will again come to around 2 million per quarter.

20 Group management report 20 CORPORATE CENTER/CONSOLIDATION The Corporate Center/Consolidation (Dürr AG, Dürr IT Service GmbH, Dürr Technologies GmbH) reported EBIT of 11.4 million in the first half of 2017 (H1 2016: loss of 8.3 million at the EBIT level). The main determinants were the gain of 22.7 million from the sale of the Ecoclean activities (Q1 2017) and the business discontinuation costs of 3.4 million for Dürr thermea (Q2 2017). At 1.1 million, consolidation effects were slightly in positive territory (H1 2016: -1.8 million). The Corporate Center also includes the Group s IT spending. Opportunities and risks The customary risks and opportunities arising from our activities are described in detail from page 78 onward of our annual report for A description of our risk and opportunity management systems can also be found there. RISKS We are currently aware of no risks which either individually or in conjunction with other risks are liable to pose any threat to the Group s going-concern status. There has been no material change in our overall risk situation since the publication of the annual report on March 17, The risks arising from underlying political conditions have lessened since the beginning of the year. Eurozone sentiment indicators have risen thanks to upbeat economic conditions and the pro-european vote in the French presidential elections. The United States determination to adopt a more protectionist course appears to be less pronounced than originally feared. As expected, US automotive sales weakened slightly compared with the previous year. Against this backdrop, we will not be able to repeat the previous year s extraordinarily large volume of new orders in North America. That said, we still anticipate solid order receipts there in 2017 especially as modernization business continues to offer good opportunities. OPPORTUNITIES The ongoing digitization of production processes and services is giving us the opportunity of setting ourselves apart from our peers. We have reinforced our software skills through acquisitions (itac, Dualis) and partnerships (Software AG) and have the necessary resources for further investments and R&D projects. With the IoT platform Tapio for the wood-processing industry, the itac.iot suite production management software and other digital solutions, we are able to offer our customers state-of-the-art products. In business with the furniture industry, the trend towards highly automated batch-size 1 production is generating strong growth potential for the HOMAG Group. Personnel changes Dr. Jochen Weyrauch joined Dürr AG s Board of Management effective January 1, In addition to the central Corporate Development and Information Technology functions, he is responsible for the Measuring and Process Systems and Clean Technology Systems divisions. Carlo Crosetto was also appointed to the Board of Management effective March 1, He took over as CFO from Ralph Heuwing, who left Dürr at his own request on May 14, With these new appointments, the Board of Management has been increased from two to three members. In this way, the Supervisory Board is responding to the Group s growth under the Dürr 2020 strategy.

21 Group management report 21 Transactions with related parties This information can be found in the notes to the consolidated financial statements on page 40. Outlook OPERATING ENVIRONMENT The global economy should expand by 3.6% in 2017, although the limited forward visibility in the US government s policies is a source of uncertainty. Impetus is being generated by declining unemployment in key countries, inexpensive funding possibilities and expansionary fiscal policies which are being scaled back only slowly. Looking forward to 2018, experts forecast further acceleration in global GDP growth. Growth in Russia and Brazil should solidify, while China and India look set to remain on their steady growth trajectories. The automotive industry should expand at roughly the same pace as the global economy over the next few years. In its July sector outlook, PricewaterhouseCoopers (PwC) projects growth of 2.7% in global automotive production to 94.7 million units in However, it has lowered its production forecast for North America slightly since its last study (April 2017). A compound average growth rate of 3.4% is projected for global automotive production in the period from 2016 to PwC raised its outlook for China somewhat in July and is now expecting a compound average growth rate of 4.8% through to The outlook for growth in the furniture sector and general industry has not changed over the last few months. Experts continue to forecast growth of 2.7% in global furniture production this year. PASSENGER AND COMMERCIAL LIGHT VEHICLE PRODUCTION Million units F CAGR F North America % Mercosur % Western Europe % Eastern Europe % Asia % Of which China % Others % Total % Source: PwC 07/2017 F = forecast

22 Group management report 22 GROUP OUTLOOK Actual 2016 Target 2017 Order intake m 3, ,300 3,700 Orders on hand (December 31) m 2, ,400 2,900 Sales revenues m 3, ,400 3,600 EBIT margin % ROCE % Net finance expense m slightly higher Tax rate % 27.2 roughly unchanged over the previous year Earnings after tax m slightly higher 1 Cash flow from operating activities m Free cash flow m roughly unchanged over the previous year roughly unchanged over the previous year Net financial status (December 31) m Liquidity (December 31) m Capital expenditure m ² 1 Including the effects from the sale of Ecoclean 2 On property, plant and equipment and on intangible assets (excluding acquisitions) SALES, INCOMING ORDERS AND EARNINGS On the basis of the predominantly strong business performance in the first half of the year, we reaffirm our full-year forecast for We assume that we will have no trouble achieving our earnings targets for The target for order intake is 3.3 to 3.7 billion. Given the high order intake in the first half of the year, it should be possible at this stage for the upper end of this range to be reached. Sales are expected to come to 3.4 to 3.6 billion in In connection with the forecasts for order intake and sales, it should be borne in mind that business of around 150 million compared with the previous year will be lost through the sale of Ecoclean. On a like-for-like basis, i.e. adjusted for the Ecoclean effect, sales should grow by 3 to 5 % in We are still seeking an EBIT margin in a target corridor of between 7.5 and 8.25% (including the income from the sale of Ecoclean). The Group targets are summarized in the above table. The targets for the divisions are shown in the table below. In view of the strong first half, the forecast for Woodworking Machinery and Systems can now be assumed to be conservative. OUTLOOK BY DIVISION Sales revenues ( million) 2016 Paint and Final Assembly Systems 1, target ,050-1,175 1,094.5 Order intake ( million) EBIT margin (%) ROCE (%) 2017 target target target 1,000-1, > > Application Technology Measuring and Process Systems Clean Technology Systems Woodworking Machinery and Systems 1, ,100-1,150 1, negative capital employed 2 around 150 million less business volume due to the sale of Dürr Ecoclean 1,125-1,

23 Group management report 23 Net finance expense will increase slightly in Among other things, this is due to the fact that the interest expense on the bonded loan issued in March 2016 will be recognized for the full year for the first time. At this stage, a tax rate of around 27% is expected. Earnings after tax should rise due to the income from the sale of Dürr Ecoclean among other things despite the fact that Ecoclean has not made any contribution to operating profit since the second quarter. In accordance with our long-term dividend policy, the distribution for 2017 should be between 30 and 40% of consolidated net profit. CASH FLOW, FUNDING AND CAPITAL SPENDING Cash flow from operating activities should be more or less unchanged over the previous year in We again project cash flow from operating activities of 250 to 300 million adjusted for changes in net working capital. Free cash flow should be in positive territory in Cash flow and cash and cash equivalents should be sufficient to cover operating funding requirements (capital expenditure, interest payments etc.) as well as the dividend distribution. We currently project a net financial status of more than 300 million for the end of This includes the proceeds from the sale of Ecoclean. Given the proceeds from the sale of Ecoclean and the cash flow generated from operating activities, liquidity should at this stage reach more than 850 million. Capital expenditure on property, plant and equipment and on intangible assets should reach a normal level of 75 to 85 million in This amount will probably be divided evenly between plant expansion projects and replacement spending. The largest single item in 2017 will be the completion of the Shanghai Campus. Capital expenditure of around 80 million is planned for Under the Dürr 2020 strategy further company acquisitions and technology buy-ins are planned. Retained earnings should result in a substantial increase in equity again at the end of We plan to discharge the loan of 34.3 million for the Campus real estate following the expiry of the fixed-interest period in September We do not expect to draw on the syndicated cash facility. There are currently no plans to raise any fresh capital; a corporate action would only be necessary in an exceptional case in the event of a very large acquisition. Our funding is stable up until EMPLOYEES Employee numbers at the end of 2017 are likely to be slightly lower than at the end of the previous year due to the sale of Ecoclean. However, they will be more or less unchanged in adjusted terms. Treasury stock and capital changes Dürr AG does not hold any treasury stock. There were no changes in our capital stock of 88.6 million, which is divided into 34.6 million shares, in the reporting period.

24 Group management report 24 Dürr on the capital market PERFORMANCE OF DÜRR SHARE, DAX AND MDAX SINCE THE END OF Jan Feb Mar Apr May 2017 Jun Jul Dürr indexed DAX indexed MDAX indexed DÜRR SHARE: ALL-TIME HIGH WITHIN STRIKING DISTANCE The financial markets were upbeat in the first half of In particular, the outcome of the elections in the Netherlands and in France allayed fears for the European economy. The results of the general elections in the United Kingdom in June were interpreted as a signal against hard Brexit. Investors took the US Fed s rate hikes in March and June in their stride. The DAX hit a new all-time high of 12,952 points on June 20, advancing by 7.4% in the first half of the year. The Dürr share (ISIN: DE ) was more volatile than the market as a whole in the first few months of the year. The strong figures for the first quarter spurred the share substantially. To date, Dürr has primarily been viewed as a pure-play automotive supplier. However, especially the high order receipts reported by HOMAG are now prompting investors and analysts to increasingly see Dürr as a diversified mechanical and plant engineering company and as an automation specialist. The Dürr share rose to in mid June, coming very close to its spring 2015 all-time high ( ). At the end of the first half, Dürr was trading at , translating into market capitalization of 3.6 billion, an increase of more than 36% over the beginning of the year. 86% OF ANALYSTS RATE DÜRR A BUY 23 analysts are covering the Dürr share. As of mid 2017, 15 analysts rated it a buy and four a hold. Numerous analysts have raised their target prices substantially over the last few months. The average target price stood at at the end of the first half. RETURN OF 0.7% ON THE BOND The price of our bond of 300 million (ISIN: XS ) with a coupon of 2.875% was virtually unchanged at 107.8% at the end of the first half of With a yield of 0.7%, the bond matures in 2021.